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London: Gold hit record highs above $1,095 an ounce on Wednesday as dollar weakness added to momentum lent to the market by India's purchase of 200 tonne of gold from the IMF to push prices through key technical resistance levels.
Gold is now poised to target the psychological $1,100 an ounce level, dealers said. Spot gold struck a high of $1,095.05 an ounce and was bid at $1,093.55 an ounce at 1055 GMT, against $1,084.50 late in New York on Tuesday.US gold futures on the Comex division of the New York Mercantile Exchange also hit record highs at $1,096.20 an ounce.
At the moment, there is technical buying on the back of Tuesday's rally in the aftermath of the IMF-India transaction, said Alexander Zumpfe, a trader at Heraeus. The transaction... reduced the amount of gold that can be sold under the CBGA by 50% for the first year.Technically, it is looking good and it seems like the market wants to test $1,100 now, he added.
The International Monetary Fund said on Tuesday it had sold 200 tonne of gold to the Reserve Bank of India for $6.7 billion, quietly executing half of a long-planned bullion sale that had threatened to slow gold's ascent.
The news sparked a rally that pushed gold through key technical levels, fuelling fresh buying.
Market watchers are now speculating over the destination of the remaining 403 tonne of gold the IMF has to sell. (The) implication is that at least one other central bank may be negotiating to buy gold from the IMF, John Meyer, an analyst at Fairfax, said in a note.
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